![NTSA Opens Investigations in UK North Sea Decommissioning Delays](/sites/default/files/styles/hart_news_article_image_640/public/image/2024/07/ntsa-opens-investigations-uk-north-sea-decommissioning-delays-1.jpg?itok=KUzMpfm6)
Oil rigs in the North sea off the coast of England and Scotland. (Source: Shutterstock.com)
The North Sea Transition Authority is investigating operators for blowing plug and abandonment (P&A) deadlines among operators on the U.K. Continental Shelf, which have caused forecast expenses to rise by billions of dollars.
Operators expect to spend about £24 billion (US$31.1 billion) on decommissioning between 2023 and 2032, a £3 billion (US$3.89 billion) increase compared to the same period last year, according to a July 16 NSTA report.
Repeated delays to P&A work, competition for rigs from overseas and cost pressures are pushing up the estimated bill for decommissioning on the UKCS, the authority said.
Hundreds of wells will need to be decommissioned every year as more oil and gas fields shut down. However, operators only achieved 70% of planned well decommissioning activities last year, NSTA reported.
“Some operators are deferring in hope that prices will go down in the coming years,” NSTA said. “However, failing to award [P&A] contracts reduces the supply chain’s revenues and ability to invest in capacity and resources.”
Pauline Innes, the NSTA’s supply chain and decommissioning director, wrote to licensees in November 2023 urging them to make headway on P&A and warned that failure to comply would bring consequences. That includes NSTA exploring the use of sanctions to bring operators online, the authority said on July 26.
The NSTA’s Directorate of Regulation has also “commenced investigations relating to alleged failures to complete timely plugging and abandonment in line with approved plans,” the authority said.
The authority is also spearheading a project to identify UKCS wells that will be ready for decommissioning between 2026 to 2030. The goal is to assess the supply chain capacity required and undertake work on time and cost effectively.
“With spending forecast to peak at £2.5bn per year in the current decade, decommissioning can ensure that the UK’s world-leading supply chain is equipped to help operators clean up their oil and gas infrastructure over the next 50 years and support the carbon storage sector, which will rely on many of the same resources,” Innes said.
Previous efforts by the industry to share information and produce robust planning helped lower estimated decommissioning costs by £15 billion between 2017 and 2022, NSTA said.
However, further improvements have been difficult to achieve as much of the “low-hanging fruit has been picked,” the authority said.
Recommended Reading
Oil Producer APA Explores $1B Sale of Permian Assets, Sources Say
2024-08-19 - APA Corp. is exploring the sale of oil and gas drilling properties spread across parts of the Permian basin of Texas and New Mexico, in a deal that could be valued at about $1 billion.
Occidental Closes $12 Billion Acquisition of CrownRock
2024-08-01 - Occidental has already started the process of reducing debt incurred through its acquisition of CrownRock LP with an $817 million sale in late July of Delaware Basin assets to Permian Resources.
Mike Wirth: The ‘Remarkable’ Rise Of Chevron’s Permian Portfolio
2024-08-20 - Chevron aims to grow Permian volumes past 1 MMboe/d in 2025—less than a decade after it averaged less than 100,000 boe/d from legacy holdings in West Texas and New Mexico, Chevron CEO Mike Wirth said.
APA Executive: After Recent Divestitures, ‘More to Come’
2024-08-19 - At the EnerCom Denver conference, an APA Corp. executive didn’t address reports that APA was shopping up to $1 billion in Permian Basin assets, but he said the company is looking to shed $2 billion in term loans associated with its purchase of Callon Petroleum.
Energy Transfer, Sunoco Announce Team Up in Permian Basin JV
2024-07-16 - Energy Transfer LP and Sunoco LP have formed a partnership that will operate more than 5,000 miles of crude oil and water gathering pipelines in the Permian Basin with crude oil storage capacity in excess of 11 MMbbl.